09.15.17

This week in Paris all seemed calm, after the turbulence of the last few years, with the only major announcement coming from SES with its new O3b mPower MEO constellation. But under the surface a lot is happening, and (perhaps appropriately) I think we are now just in the eye of the hurricane, and the storm will shortly ramp up once again, before we find out who and what will be left standing in a couple of years time.

SES’s announcement came several months after it selected Boeing to build the O3b NEXT constellation (the “development agreement” was announced in July as part of SES’s half year results) and the delay until now appears to have been due to SES waiting for an anchor tenant that never materialized. In fact I believe SES originally expected to announce the contract in May, as was hinted at when SES’s CEO said he was “too busy” to go to Satellite 2017). However, SES is clearly not willing to see OneWeb, ViaSat and Inmarsat take the lead in new data-oriented satellite systems, whether or not it secures a major anchor tenant for this system.

Another subject of much debate is what Panasonic will decide to do now its original plan to invest in dedicated XTS satellites appears to be dead. Panasonic wants to lay off much more of the risk on a satellite operator, rather than underwriting the satellite costs in full, as Thales did with SES-17. Will an FSS operator be prepared to take this risk, bearing in mind that Intelsat is short of money, SES is now building O3b NEXT (which won’t be well suited for high latitude aero operations) and Eutelsat is intending to partner with ViaSat? Or would Panasonic do something more radical and let a rival like Inmarsat take over provision of connectivity services?

Finally, Inmarsat seems to be under a lot of pressure after a 15% decline in its share price in the last two weeks, and some were speculating that recent personnel changes were connected to this uncertain outlook. Profitability of aero contracts (notably that with Lufthansa) remains a major concern, and issues remain to be resolved for the EAN air-to-ground network, especially if Inmarsat is forced to provide a more robust satellite link in the wake of ViaSat’s legal challenge.

All of these issues provide much food for thought, and could lead to significant realignments in the industry over the next year. Decisions affecting the inflight connectivity market are almost certain to occur, because Panasonic can’t wait too long to provide clarity on its future positioning, and so we had better batten down the hatches for the coming winds of change.